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SVB in talks to sell itself after attempts to raise capital fail

cnbc.com

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Re: SVB in talks to sell itself after attempts to raise capital fail

#121

Post by spoonjim »

ejb999 wrote: post #53
jpmattia wrote: post #50

Earlier quoted context omitted.

> why should the taxpayers be put on the hook for that? One reason that it was done in the past was because it saves the taxpayers money by bailing out a single meltdown rather than something systemic. But you should recognize: The taxpayers back up the FDIC, but singleton meltdowns are paid out of the insurance fund, which is paid into by the banks themselves. As long as that fund does not get exhausted (ie a system…

and then makes the next failure even more likely - companies will take on more and more risks if they know they will be bailed out. I for one am tired of privatizing the profits, and socializing the losses.

The owners of the bank - the people who keep the bank’s profits - are wiped out when a bank is dissolved.

Re: SVB in talks to sell itself after attempts to raise capital fail

#123

Post by jejeyyy77 »

capableweb wrote: post #115
jejeyyy77 wrote: post #60

Earlier quoted context omitted.

Literally transfer the money anywhere at this point.

You literally cannot just transfer the money anywhere if it's money meant for a business. In many countries, just transferring that money to your personal account would be illegal. And many banks won't allow you to open a business account and directly after transfer millions of funds to it, without a long process of due diligence (AML/KYC). There is also a bunch of anti-terrorism (funding) laws that might prevent thi…

Not true for the US re: moving money to your personal account being automatically illegal.

Re: SVB in talks to sell itself after attempts to raise capital fail

#124

Post by Otek »

pigsty wrote: post #106
dmix wrote: post #17

Earlier quoted context omitted.

I can't count how many times I've read similar comments on HN in the last 10yrs

If everyone’s saying we’re in a bubble, we probably are. Just because it keeps getting bigger doesn’t mean it’s not going to pop. We’ve had 15 years of people getting billions for phone apps made in 12 months and forgotten in 6. Random individual software startups are valued more than basically the entire hardware industry under them. Bitcoin peaked out at 1.28 trillion and it still has no use beyond being a converte…

No, if no one is saying that we are in a bubble, then we might be in one. Because when everyone thinks it’s a bubble they are extra careful. When they don’t think about it, they just grow the bubble

Re: SVB in talks to sell itself after attempts to raise capital fail

#126

Post by capableweb »

jejeyyy77 wrote: post #123
capableweb wrote: post #115

Earlier quoted context omitted.

You literally cannot just transfer the money anywhere if it's money meant for a business. In many countries, just transferring that money to your personal account would be illegal. And many banks won't allow you to open a business account and directly after transfer millions of funds to it, without a long process of due diligence (AML/KYC). There is also a bunch of anti-terrorism (funding) laws that might prevent thi…

Not true for the US re: moving money to your personal account being automatically illegal.

The context is "International Startups" so I'm assuming that means Non-US startups.

Re: SVB in talks to sell itself after attempts to raise capital fail

#127

Post by almost_usual »

ancorevard wrote: post #112

In hindsight they shouldn't have bought those MBSs, should have foreseen the coming inflation and the following interest rate hikes, and of course shouldn't have said those words yesterday. However, sad to see what looks to be another government caused implosion. - First, via the massive government stimulus COVID19 SVB got enormous amount of deposits in 2020/2021. They have to put that money to work, and the traditio…

I’d argue preventing a total financial collapse in 2020 is more important than SVB and some startups failing.

Re: SVB in talks to sell itself after attempts to raise capital fail

#128

Post by rcme »

nonethewiser wrote: post #110
rcme wrote: post #95

Earlier quoted context omitted.

No, failing is failing. It means the bank is insolvent. That doesn't mean the bank is worthless, but it doesn't have enough cash to meet its obligations. And yes, depositors will likely get some of their money back, but only after a long battle. Also, the bonds held by the bank are likely off the run. The market for these is not large.

You're disagreeing but I dont see the conflict between your claims and his.

He's making it sound like depositors are going to get 80% of their money back tomorrow. It's going to be a years-long legal battle while affected companies are going to potentially shutter due to an inability to meet obligations. Also, his number of 80-85 is based on the yield of the treasuries, but old treasuries like this are hard to move.

Re: SVB in talks to sell itself after attempts to raise capital fail

#129

Post by Ekaros »

rich_sasha wrote: post #103
rcme wrote: post #95

Earlier quoted context omitted.

No, failing is failing. It means the bank is insolvent. That doesn't mean the bank is worthless, but it doesn't have enough cash to meet its obligations. And yes, depositors will likely get some of their money back, but only after a long battle. Also, the bonds held by the bank are likely off the run. The market for these is not large.

Yes, insolvent, but the money doesn't go poof. I never traded cash bonds but would struggle to imagine it would be hard to liquidate. Sure, over a week, but surely SVB can't be a major bondholder.

They are easy to liquidate. But not at the face value. For that you need to wait until maturity.

Principle is simple. Why would you buy from someone a piece of paper saying someone else(even government) will pay you 1,5% a year. When you could directly buy from then similar paper paying 4%.

Re: SVB in talks to sell itself after attempts to raise capital fail

#130

Post by kgwgk »

rich_sasha wrote: post #87

One thing to bear in mind is that "failing" is not binary. The story seems to be that SV put all their deposits into 10 y bonds in 2021. I'll use that as an approximation. A 10Y bond will usually move about 8x as much as the underlying interest rate (it's called "duration"). So if SVB did nothing but buy these bonds and sit on them, then they would have lost about 36% on these (8 x 4.5% rate movement). That's a lot b…

> My finger in the air haircut would thus be maybe 15-20% loss of deposits, if this simplified model has anything to do with reality. That's a lot but also means depositors get 80-85% of their money back.

Depositors have been getting 100% of their money back. [and will still do if they are quick (or has the bankruptcy been declared already?) - edited: too late!]

The loss - that is an amount measured in dollars, not an abstract percentage - is going to be supported by a smaller number of depositors.

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